Plumbing Fixture Manufacturers Plan for Economic Changes
Out of all other home goods manufacturers, the plumbing fixture sector has perhaps the strongest ties to the economy. What does the current U.S. economic status spell for plumbing, and how can businesses prepare for what’s to come?
Housing market pain points shared by home goods manufacturers
It should come as no surprise that the residential housing market has seen better days, even in recent years. Homeowners are still very reluctant to invest considerably in home improvement projects, let alone purchase actual real estate. According to the Joint Center for Housing Studies of Harvard University, data from 2014 shows remodeling is down more than 40 percent when compared to “pre-recession levels.”
In a $300 billion industry representing nearly 2 percent of the entire U.S. economic picture, that’s a substantial loss for many home goods manufacturers, especially those in plumbing. After all, while bathroom and kitchen renovations can add a great deal of value to a home, they typically represent extensive projects with high costs. And when the housing market is unstable, not even the financially savvy homeowners want to stretch their budget and take the risk.
Successes in the housing market and plumbing fixture industry go hand in hand.
Recovering housing market a boon to plumbing if manufacturers can keep up
That said, things are turning around. Not only are more people investing in home rebuilds in the last two years, but general recovery in the housing market has led to a doubling of single-family starter home purchases (when compared to 2008 recession lows) and a drop in interest rates for 30-year mortgages, as reported by The Wall Street Journal.
Both are good signs for plumping, so long as the industry can position itself for increased demand. With fewer families renting and more buying, the plumbing fixture industry should prepare itself for higher production levels. The need for operational readiness is further compounded by attractive financing options providing first-time homeowners with extra cashflow to invest in repiping their “fixer-uppers.” For these reasons and more, estimates from The Freedonia Group indicate 6.3 percent demand increases in the plumbing fixture and fitting industry annually between now and 2019.
Where should plumbing fixture manufacturers focus to plan effectively for the future?
How quickly can your fixture manufacturing facility respond to consume trends? How long is your average project lead time? Those are the kinds of questions that will keep this industry ahead of the curve.
For example, many homeowners and commercial property owners alike see great potential in low-flow fixtures, which conserve water and save on heating costs. No doubt wary homebuyers who finally took the plunge will still look for opportunities to cut costs long after much-needed renovations. If manufacturers can update their more popular goods to meet sustainability expectations created by consumers – and the government, don’t forget them – they’re liable to win out when the housing market returns to its former glory.
Broadly speaking, facilities should continually improve their abilities to predict consumer trends and develop actionable strategies, for profiting but also for planning and hopefully preempting future challenges. Tankless water heating systems, for instance, are gaining popularity. Differing from tanked water heaters, these units reside right at point of use and forgo traditional distributed hot water plumbing. As a result, many new homeowners looking to inject a little energy efficiency into their property may choose to go tankless rather than stick to conventional plumbing. Has your business targeted this consumer yet? Are your products compatible with tankless systems? Do you have a plan for the day when everyone has a tankless system?
So, where are the blockages in your pipeline? Take a look at the operations necessary to turn an idea into a salable plumbing product, focus on what slows things down and use data to streamline efficiency. Only then will your facility be ready to raise to new challenges in a post-recession economy.